Bermuda-based specialty insurer and reinsurer, SiriusPoint, has reported a core combined ratio of 89.1% in its full year 2023 results, marking a return to core underwriting profit after a combined ratio of 101.6% in 2022.
For the year, core underwriting income rose considerably, from a loss of $34.8 million in 2022 to a gain of $250.2 million in 2023, driven primarily by favorable prior year loss reserve development, lower catastrophe losses and a favorable commission ratio.
Net of reinsurance and reinstatement premiums, catastrophe losses for the year totalled $24.8 million, driven by the Turkey earthquake and Chile wildfire, with the firm also highlighting losses from the Hawaii wildfire and Hurricane Idalia. In comparison, cat losses in 2022 amounted to $137.9 million, driven by Hurricane Ian.
Losses incurred for the year included $167.4 million of favorable prior year loss reserve development compared to $13.5 million for the year ended December 31, 2022.
For FY23, core gross premiums written (GPW) decreased by $94.9 million, or 2.8%, to $3.3 billion compared to $3.4 billion a year earlier. At the same time, net premiums earned decreased by $19.3 million, or 0.8%, to $2.3 billion. The re/insurer attributes the decreases in premium volume to declines in the reinsurance segment amid the execution of its restructuring plan.
Group-wide, FY23 core income rose to $291.4 million from $2.6 million in 2022, which consists of the improved underwriting income, and net services income of $41.2 million, against net services income of $37.4 million for 2022.
In the firm’s reinsurance segment, underwriting income for the year totalled $206.2 million with a 80% combined ratio, compared to a loss of $66.9 million and a combined ratio of 105.6% in 2022. The improvement in net underwriting results was primarily due to higher favourable prior-year loss reserve development and lower catastrophe losses.
Meanwhile, reinsurance GPW hit $1.3 billion for FY23, a decrease of $250.4 million, or 16.5%, compared to FY22, on the back of lower premiums written in international reinsurance, primarily in the property lines.
In the firm insurance and services arm, income of $86.3 million was recorded for FY23, compared to $69.7 million for FY22. This consists of an underwriting income of $44 million with a combined ratio of 96.5% and net services income of $42.3 million, compared to an underwriting income of $32.1 million and a combined ratio of 97%, and net services income of $37.6 million in 2022.
For FY23, the insurance segment GPW reached over $2 billion, an increase of 8.3% year-on-year.
The re/insurer has reported that the total core investment result for FY23 which was primarily attributed to net investment income related to interest income from debt and short-term investment portfolio of $277 million. This increased investment income was due to increased interest rates and the rotation of the portfolio from cash and cash equivalents and U.S. government and government agency positions, to high-grade corporate debt and other securitized assets, in an effort of portfolio diversification, explains the firm.
Scott Egan, Chief Executive Officer, Siriuspoint, commented: “At full year 2022, we set out our ambition to create a business which is simpler, generating less volatile earnings and delivering a double digit return on equity by 2024. We have made significant progress against these objectives in 2023. As we look ahead following significant restructuring, our ambition in the medium-term is to create a business with an underwriting-first approach which can grow and deliver strong profitability in a more consistent manner.
“2023 was a turn-around year and marks the end of restructuring. It gives us a more stable platform to build from having exceeded our initial expectations. We delivered our fifth consecutive quarter of positive underwriting result with the full year 2023 combined ratio for the Group’s Core operations at 89.1%. Our underwriting results were supported by the completion of our cost savings program, which delivered more than $50 million of savings ahead of schedule. We have simplified the business and have taken great strides to improve our performance-driven culture.
“Investment results were ahead of updated guidance and we report $284 million of net investment income for 2023 with significantly less volatility. We have made further progress around rationalizing our equity stakes in MGAs which are down to 26 at year-end compared to 36 at the start of the year. Our consolidated MGA revenues grew 10.2% year to date, margin increased to 20.9% resulting in a 36.9% increase in our net service fee income.
“Our balance sheet is strong and we had upward revisions to our financial strength rating outlook to stable from Fitch and S&P during 2023. Our results are ahead of our financial targets but 2023 is not a destination as we look to improve returns and achieve an ROE of 12-15% in the medium term. Our approach will be to remain prudent stewards of capital whilst maintaining a conservative capital position.
“Our improvement in profitability reflects the significant rebalancing and enhancements we have made across all areas of our business. In 2024, we look to further improve and deliver as we continue to build on last year’s strong foundation.”
